Cailianshe reported on January 9 that after being suppressed by Xinhua News Agency , after a brief adjustment, A shares Wang Kweichow Moutai continued to rise in the new year. Today, Moutai closed up 4.04%, with a market value of 983 billion yuan, only 1.73% away from trillion yuan. It is expected to become the seventh A-share market with a market value of over trillion yuan after the four major banks of Industry, Agricultural Bank of China and China Construction Bank, Ping An of China and China Petroleum. It will also become the third consumer stock in the world with a market value of over trillion yuan after Coca-Cola and Pepsi .
What is more valuable is that Coca-Cola and Pepsi are global brands, while Kweichow Moutai is a Chinese brand, with a very small proportion of overseas sales. This may reflect the strong consumption capacity of the Chinese middle class.
Moutai's trillion-dollar market value has been refined into
Kweichow Moutai, known as the Chinese national liquor, has a strong reputation and appeal among the Chinese people. Since its public listing in 2001, Moutai's performance has also maintained positive growth, with revenues increasing from 1.6 billion in 2001 to 40 billion in 2016. The revenue in the first three quarters of this year was 44 billion yuan, and the annual revenue is expected to exceed 55 billion yuan. Profits increased from 328 million yuan in 2001 to 16.7 billion yuan last year, and are expected to exceed 25 billion this year.
Source: wind information
Relying on the growth of profits, Moutai's stock price has also been at the highest level of A-shares for a long time. During this period, it was occasionally surpassed by other companies' stocks, but those who surpassed it ultimately failed to continue to outperform Moutai.
From the trend, Moutai experienced four waves of big rises after its listing. The first wave was during the bull market from 2005 to 2007, but Moutai actually started to rise in 2004. At that time, the highest price hit 230.55 yuan (after ex-rights, the same below), and then encountered a financial crisis and followed a sharp drop. The re-rights increase during the period was more than 39 times; from the end of 2008 to mid-2012, the trend of the second bull market was relatively volatile, and finally hit a high of 266.08 yuan. The re-rights increase during the period was 2.6 times. Subsequently, Moutai fell sharply due to the national anti-corruption blow. Although its performance did not fall during the period; from 2014 to mid-2015, Moutai rebounded with the bull market, reaching a maximum of 290 yuan, and the re-rights increase during the period was 1.78 times. It then fell back due to the stock market crash, but this round of adjustment ended soon; the increase has exceeded 3 times since August 2015, and this round of increase is mainly due to the transformation of market style to blue-chip stocks and the opening of the era of Chinese consumption.
From the trend, Moutai's first three rounds of stock prices are still closely related to the trend of market . The 39-fold increase in the bull market from 2005 to 2007 laid the foundation for Moutai's blue-chip stocks. However, this round of trends obviously surpass the market and reflects more of the market style switching. Moreover, this style switching may determine the fate of the Chinese stock market in the next few years, and the banner is undoubtedly Moutai.
In mid-last year, when Moutai's stock price exceeded US$700, the official media Xinhua News Agency issued a warning that there might be a bubble, triggering a pullback of more than 10%, and driving the market to fall collectively. However, Moutai quickly stabilized and once again rose and broke through the previous high under the stimulation of the price increase at the end of last year.
How terrible is Moutai's trillion-dollar market value
Moutai's value exceeds trillion, although Moutai is still much inferior compared to Tencent and Alibaba, compared with other leaders in A-share industries, Moutai is definitely an attractive existence.
China is now the world's largest steel country, but Baosteel Co., Ltd., the leading steel industry leader, has a market value of about 200 billion yuan, only about 1/5 of Moutai. However, Baosteel's revenue in the first three quarters of this year exceeded 250 billion, more than five times that of Kweichow Moutai. As of January 8, the total market value of the steel industry of the Shenwan Industry Index was only 881.5 billion.
China has the world's largest real estate market, and China's leading real estate Vanke A has a market value of about 390 billion yuan, less than 1/2 of Moutai. Vanke A's revenue exceeded 110 billion in the first three quarters of this year, more than twice that of Guizhou.
As of May 9, the total market value of China's GEM was 5.22 trillion yuan, more than 5 times that of Moutai. The total market value of the top ten stocks with market value of the ChiNext is 679.1 billion yuan, which is still far lower than that of Moutai.
Guizhou Province where Kweichow Moutai is located, the total amount of GDP in 2016 was 1173.4 billion yuan, which is only slightly higher than Moutai's market value. China's cities with GDP exceeding one trillion this year are expected to reach 15.
From an international comparison, except for Coca-Cola and Pepsi, which have market value exceeding Moutai, the market value of Diageo , which is also the leader in strong wine, is US$99.8 billion (648.7 billion yuan), less than 70% of Moutai’s.Diageo is also a global salesperson.
How much room does Moutai have in the future
Moutai's latest round of rise is price increase. On December 28, Kweichow Moutai announced that it would appropriately increase the price of Moutai liquor products from 2018, with an average increase of about 18%. Its flagship product is currently priced at 1,499 yuan/bottle, and previously it was 1,299 yuan/bottle.
Since Moutai’s cost is relatively fixed, and Moutai is currently in short supply and demand, the price increase has little impact on sales, so the price increase will help improve the company’s performance. In fact, the current price of Moutai is even worse than in 2011. If you want to compare the historical highest price, Moutai still has a lot of room for improvement.
In the past few years, there were rumors in the market that those who buy Moutai do not drink Moutai, and those who drink Moutai do not buy Moutai. This implies that Moutai is mostly used for gifts and public funds consumption. Therefore, starting from 2012, the government strictly implemented the "Eight Regulations" and anti-corruption, which caused the market to worry about the prospects of Moutai and caused the pullback of Moutai's stock price.
But in fact, we see that although Moutai's performance growth slowed down, the trend has not changed, and sales revenue and profits accelerated again in 2016, indicating that Moutai's sales revenue is mainly from private consumption.
Moutai’s price adjustment statement issued on January 8 also pointed out that to effectively promote the company’s products to be closer to personal consumption, private enterprises and the middle class, the company will be more committed to providing better products and services, so that the above-mentioned consumers, as the existing consumer force of the company’s products, will be more stable.
This shows that the middle class has become the main consumer group of Moutai. According to the survey and calculations of the China Family Finance Survey and Research Center of Southwest University of Finance and Economics, in 2015, the number of middle class in China was actually 204 million, far exceeding the 109 million people reported by Credit Suisse Wealth. It is estimated that by 2020, the number of middle class in China will exceed 400 million, which will be the largest middle class in the world, more than the total number of people in the United States.
The growth of the number of middle class and income will be the main driving force for Moutai's performance growth. Based on this, many securities companies have published research reports on the optimistic prospects of Moutai.
Among them, Guojin Securities raised the target price of Moutai to 830 yuan. Gaohua Securities raises Moutai’s target price in the next 12 months to 882 yuan. As early as October last year, CICC set its target price for Moutai at 850 yuan. (Liao Dingfeng|Cailianshe)
